Puerto Rico’s Debt Offers High Yield and High Risk

The commonwealth’s governor warned that the island’s debt is unpayable. Municipal bond investors should approach with caution.

July 4, 2015

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Puerto Rico moved closer to a broad debt default last week when its governor, Alejandro Padilla, said in an interview that its debt “is not payable” and signaled that the commonwealth will seek a broad restructuring of its $72 billion of debt obligations.

The surprise move triggered a sharp drop in the price of Puerto Rico’s...

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